The virus does not strike the construction industry

In April a 2,1-percent drop was measured compared to the last year’s basis, therefore, the production volume of the construction industry declined with 0,7 percent in the first four month compared to the same period of the previous year. “This is considered a good result even when compared to the European standards” – highlights the data of flash report of CSO (Hungarian Central Statistical Office) Anita Boros, state secretary of the Department of Innovation and Technology, responsible for construction economy, infrastructural environment and sustainability. A moderate decrease was experienced in April, indicating that the government’s role to balance the demand was successful, and the construction industry could perform well. “The value of the new contracts has grown, however, the overall order book still lagged behind that of the previous year. The significant decline of the municipal public procurements strikes the rural companies and small firms mainly” – reported to the Világgazdaság László Koji, CEO of National Federation of Hungarian Building Contractors. It is still unsure when the settlements facing difficulties due to the income losses become active again in the field of procurements for building.

According to László Koji, the delayed residential or municipal orders will arrive sooner or later, so coronavirus will not cause as severe injuries as the economic crisis, resulted in a recession between 2008-2013, has done. The last remarkable recession in the industry was measured in 2016 which was followed by an upswing – from what a slow-down was expected due to the high basis even before the virus. According to the National Federation of Hungarian Building Contractors, the decline in the constructional production will not exceed 5-6 percent in the first year as from the end of June supported accommodation investments, kindergarten and castle programs are commencing, and at the end of the year the first rust belt orders are starting as well. Based on our expectations, the rust belt territories will have been assigned within 2-3 months – and in these regions the construction of flats that can be sold with a discounted, 5-percent VAT will start. The exact volume of the development is still unknown.

While the order book concerning the buildings slightly increased, the number of orders for other buildings decreased parallel the phasing out of the EU funds. On the other hand, this could be a subindustry where the government may start new investments with the objective of economic recovery – said András Horváth, lead analyst of Takarékbank. The prolonged decline of purchasing power may have negative effects that pulls the private constructions and renovations back. Nevertheless, the demand of new housing market has increased and tripled compared to the low peak in March. What is more, based on the information of Ingatlan.com, the interest has grown with 28 percent compared to last year. “90 percent of the flats ready to move in by fall and 70 percent of the flats handed over within one year are already sold and the supply is getting more and more narrow” – warns Tibor Földi, CEO of Cordia Zrt.